This year, users of electric vehicles will pay an additional £85 million in UK tax when using public auto chargers due to a discrepancy in VAT rates, which the industry claims is impeding the shift away from fossil fuels.

Electricity users at home only pay 5% VAT, whereas companies, including those that operate electric car chargers, pay 20%. This implies that utilising public chargers to charge a car will cost more.

Based on consumption trends, the analytics company Zapmap has estimated an additional £85 million in costs for 2025. As EVs approach 80% of all new car sales under the government's zero-emission vehicle (ZEV) mandate, that additional VAT is expected to soar by £315 million by 2030.

The government is planning to ease the ZEV mandate due to declining car sales, as automakers argue that addressing the VAT disparity on charging would boost demand for electric vehicles.

Eurig Druce, UK group managing director of Stellantis—owner of Vauxhall, Fiat, Jeep, and Peugeot—warned that the current system risks creating a divide where those with home chargers pay less than those reliant on public charging. "That can’t be right," he stated.

The FairCharge campaign group has urged Treasury chief secretary Darren Jones to address what they call a “pavement tax,” arguing that it hinders the transition to electric vehicles, according to a letter seen by The Guardian.

Quentin Willson, former Top Gear presenter and founder of FairCharge, criticized the policy, calling the failure to equalize VAT rates between public and private chargers a “bizarre and conspicuous omission.” He emphasized that lowering VAT on public charging is essential for advancing the country’s electrification efforts.

Electric vehicle drivers are expected to pay an extra £85 million in VAT in 2025—a fraction of the £2 billion the government allocated to freezing fuel duty for petrol and diesel vehicles in the October budget. Environmental groups strongly criticized the continued fuel duty freeze, but Chancellor Rachel Reeves defended it, citing concerns about burdening struggling households.

Although eliminating the VAT disparity would be a minor cost compared to the subsidies for petrol, the Treasury may hesitate to cut VAT on public charging as fuel duty revenues decline with the shift to electric vehicles.

Delvin Lane, CEO of charge point operator InstaVolt, stated that any VAT reduction would immediately be passed on to customers through lower charging prices.

“This small change would bring fairness to those without home chargers, encourage more drivers to switch and support price parity between home and public charging,” he added. “It’s surprising that there has been no movement on this.”

Matt Galvin, the managing director of the electric car brand Polestar in the UK, said: “This is an urgent requirement to support EV adoption, particularly to encourage the private buyer, and prevent unfair costs to those without driveways.”

A Treasury spokesperson said: “The shift to electric vehicles is crucial for decarbonising the transport sector and tackling climate change, and will support growth and productivity across the UK.

“Our balanced approach ensures fiscal stability while continuing to provide incentives through the tax system such as freezing vehicle excise duty first-year rates for EVs to encourage the transition to electric and zero emission vehicles.”